Friday, September 9, 2022

Chile's vote to reject a new constitution is a real boost to EV metals mining, according to business press

 September 9, 2022

Chile's vote to reject a new constitution is a real boost to EV metals mining, according to business press…

Chile voted to reject a proposal for a new constitution with progressive values today, in what is largely seen by the business press as an opportunity for "EV metals mining," namely lithium mining, in the interest of large western corporations. The causality?  Unclear.  That is to say, there is no telling whether the "need" on the part of rich countries for "EV metal material," is what caused, or what benefited, from the rejection of the new constitution.  


Chile’s EV Metals Mining Gets Boost After Voters Reject Constitution

By 

Craig Mellow 

Sept. 9, 2022 2:30 am ET

Chilean voters celebrate following the rejection of the national constitutional referendum in Santiago, Chile, on Sept. 4, 2022. The ‘no’ vote could give a boost to the country’s mining companies.

Cristobal Olivares/Bloomberg

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What does a constitutional referendum in far-off Chile have to do with California’s ambitious new targets for electric vehicles? A lot, actually. 

The South American nation of 19 million is the world’s dominant copper producer, boasting a third of global output, and No. 2 in lithium. The planet needs much more of both of these metals if EVs and renewable energy are going to save it. Demand for copper will double by 2035, S&P Global research predicts. Chileans’ landslide rejection of their new proposed constitution on Sep. 4 could make the race for supply easier. 

The 178-page document offered lots of reasons for 62% of the electorate to vote No, from a universal right to “nutritious food” to a “plurinational” state structure. “Chile is a pretty pragmatic society,” says Shannon O’Neil, senior fellow for Latin American studies at the Council on Foreign Relations. “A comprehensive leftist transformation was just too much.” 

The draft constitution also threatened mining investment, notably through a ban on extraction near “glaciers and other protected areas.” That could have excluded rich copper seams in the high Andes, depending on how the terms were defined.

The resounding defeat could also curtail President Gabriel Boric’s push to extract more revenue from miners. Boric’s campaign sprang from the same street protests that catalyzed the constitutional convention in 2019, and he supported its passage.

A fiscal blueprint he sent to Congress this summer would hike effective tax rates for mining from 37% to 59%, estimates Francisco Acuna, a Santiago-based consultant with commodities specialist CRU. “This would put Chile out of consideration for tier-one mining companies,” he says.

The legislature will likely rein this in now to about 45%, closer to global norms, Acuna predicts. Boric fired his mining and interior ministers two days after the vote, a signal he is tacking toward the center. 

That is bullish news for global mining giant BHP (ticker: BHP), which operates the world’s largest copper mine at Escondida, Chile. It has targeted $10 billion more for the country under conditions of “legal certainty.” Other miners waiting-and-seeing on big new Chile strikes include Antofagasta (ANTO.UK) and Teck Resources (TECK). 

The certainty these companies crave is still a ways off. Boric, who just took office in March, remains committed to taxing miners more to pay for social programs like pensions and education, and to tighter environmental regulation. He retains backing for these goals, O’Neil says. “The broader social demands that led to Boric’s election are not over,” she says. 

Chilean lithium mining was a mess before Boric arrived. Ex-dictator Augusto Pinochet declared it a “strategic resource” under state control because lithium is used in nuclear fission. Successive governments failed to develop a public-private investment framework even as the EV age dawned. Australia roared past Chile as the top world producer, although Chile has 50% more reserves.

Boric has floated creation of a state lithium company, akin to copper miner Codelco, possibly in partnership with lithium-rich neighbor Argentina. Consultant Acuna isn’t impressed. “There’s been no real discussion about making the resources easier to exploit,” he says. 

The same might be said about the quest for “green metals” globally. The world seems to have belatedly united around a technological transformation to abate climate change. 

Extracting the necessary raw materials is, if anything, getting more difficult. The failure of Chile’s woke constitution provides some breathing room, though.


Note, with due diligence, the inclusion of the factoid about lithium's determined role as a strategic resource, due to its role in "nuclear fission" under a fascist government instituted by a US-backed coup (Pinochet), that for Chileans almost certainly refers back to historical trauma that most reasonable folks would like to put behind them for the time being. 

The role that lithium plays, allegedly, in nuclear fission, is as certainly tangential as its reference is in that context to the current situation. 

The reason it was included in the article very clearly has to do with casually conflating the idea of nuclear power with issues about green energy.

The extremely forced historical amnesia that was attempted with this reference is also very painful. 

The Pinochet regime was brought to power under the auspices of a several-thousand-page economic manifesto drafted by University of Chicago neo-conservative economists, listing every possible way a dictatorial regime could control the entire economy for the purpose of export to US multinational elites, and the exploitation of the domestic population. 

It would be more surprising for some thing not to have been listed in the central economic manifesto that powered this neo-fascist regime.

Therefore, referencing any determination of the strategic value of any Chilean national resources under the Pinochet regime is absurd. 

The only purpose would be to confuse our current situation about green energy by conflating it with an unrelated vested interest.

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